Government to save Rs 1,600 crore a year in foodgrain procurement post GST

Source: The Economic TimesFeb 10, 2018

The Centre is estimated to save Rs 1,600 crore annually in procurement of foodgrains as its tax expenses have reduced after the introduction of GST, Food Minister Ram Vilas Paswan said today.

Only GST is being levied on procurement and not state taxes, resulting in 18 per cent reduction in taxes on foodgrain procurement, he said.The government is expected to save Rs 1,600 crore annually, he added.

On capital restructuring in Food Corporation of India (FCI) as announced in the Union Budget 2018-19, Paswan said the government will infuse equity in the FCI next fiscal to reduce interest burden. FCI will also issue long term bonds. FCI is the government’s nodal agency for procurement and distribution of foodgrains.

Asked about impact on inflation from proposed increase in the minimum support price (MSP) by 1.5 times, the minister said that there would be no impact on common man as the government is providing wheat and rice at Rs 2-3 per kg to over 80 crore people of the country.

Paswan informed that budget allocation for food ministry has been increased to Rs 2.24 lakh crore in 2018-19 from Rs 1.96 lakh crore in this fiscal. The food subsidy has been increased to Rs 1,73,323 crore from 1,44,781.69 crore in this financial year.

Paswan said the budget outlays for consumer affairs department is Rs 1,804.52 crore for next fiscal as against 3,733 crore this fiscal. This is because of reduction in price stabilisation fund to Rs 1,500 crore from Rs 3,500 crore.

“The food subsidy bill has been rising as MSP is being increased every year, while the issue (sale) price of foodgrains under food law has not been hiked,” he said.

The government has deleted 2.75 crore bogus ration cards which has helped in providing Rs 17,500 crore worth subsidy to eligible beneficiaries, he said.

Paswan said the government has linked over 80 per cent of ration cards with Aadhaar. Point of Sale (PoS) machines are being deployed in ration shops.

This will help food ministry to introduce portability of PDS under which beneficiaries can take their foodgrains quota from any ration shops in the states.

PDS portability has already been started in five states — Andhra Pradesh, Telangana, Haryana, Gujarat and Delhi.